Ex-IAF chief Tyagi in the dock over chopper deal

New Delhi/Rome: Italy’s ongoing probe into its defence firm Finmeccanica’s $750 million chopper deal with India now points to the involvement of former Indian Air Force (IAF) chief SP Tyagi, who was allegedly bribed by the company to swing the contract in its favour.

Hours after arresting Finmeccanica CEO Giuseppe Orsi, the Italian investigators claimed that the country’s state-run defence firm paid huge kickbacks to Tyagi when he was chief of the IAF to swing the controversial AgustaWestland VVIP chopper deal in its favour.

Reports on Wednesday claimed that Italian investigators have given details of their ongoing investigation into the alleged chopper deal in a 64-page report that was filed in the tribunal of Busto Arsizio city for the arrest of Finmeccanica CEO on Tuesday.

In the report, the Italian prosecutors have alleged that the then IAF chief, SP Tyagi, was instrumental in swinging the deal and was paid - "certain amount of money, not yet quantified"- through intermediaries –one of them being Julie Tyagi, a close relative of the former IAF chief.

The preliminary inquiry report further alleges that technical requirements for the contract were tweaked by India to allow the AgustaWestland chopper enter the bidding process and that kickbacks of 51 million euros (about Rs 370 crore) were paid in Italy and India.

This is the first time that a service chief has been named in a probe into alleged corruption in the procurement of defence systems.

However, Tyagi has categorically dismissed the allegations and denied receiving any money from the Italian firm to swing the deal in its favour.

Defending himself, Tyagi told a leading TV news channel yesterday that the AgustaWestland chopper deal meant for the use of VVIPs in India was finalized three years after he retired from the IAF.

The Finmeccanica CEO’s arrest stunned the political system and the country’s defence establishment, exposing the prevalent practice of giving kickbacks by the foreign defence companies for securing big-value deals with India.

Hours after Orsi’s arrest, the Centre ordered a probe into the $750 million deal for securing 12 VVIP AgustaWestland helicopters from Italy.

Finmeccanica CEO Giuseppe Orsi, who had been under investigation, was arrested for bribes allegedly paid to secure the sale of firm’s 12 helicopters to India, the Italian media said.

Three other people had also been placed under house arrest as part of the probe, including Bruno Spagnolini, the head of Finmeccanica`s helicopter unit AgustaWestland, the Italian media reported.

Orsi, who has now been put under house arrest, has been under investigation for embezzlement for several months. However, he has categorically denied any wrongdoing and has vowed to clear his name.

Prosecutors allege he profited illegally from the sale of 12 helicopters to India.

Italian Prime Minister, Mario Monti, later said in an interview with Italian television, "There is a problem with the governance of Finmeccanica at the moment and we will face up to it."

"Magistrates will do their work. I`m sure they will do it thoroughly and in the best way possible." The Italian government owns a 30 percent stake in Finmeccanica.
The contract for the helicopters had been signed in February 2010.

This is not the first time that the allegations have surfaced. Three of the helicopters have already been delivered to the Indian Air Force (IAF), the first of them in December 2010.

Some 30 percent of the contracted amount has already been paid and the remaining would have to be paid as and when the remaining nine machines are delivered.

A scale model of the helicopter had formed part of the IAF tableaux during the Jan 26 Republic Day parade.

Explaining the rationale for the CBI probe, a Defence Ministry statement said, "Press reports have appeared from time to time on the subject of Italian prosecutors having initiated a probe into the alleged unethical dealings of M/s. Finmeccanica, Italy. The probe had been widened to include the Indian contract signed with M/s. AgustaWestland.”

"In view of the media reports" the Defence Ministry, through the External Affairs Ministry, "had sought information from the governments of Italy and UK. No specific inputs were, however, received substantiating the allegations," the official said.
"In a recent report, appearing in certain sections of the media, it has been reported that the chairman of M/s. Finmeccanica has been arrested in connection with the investigation into the case of the sale of helicopters to India. The contract signed with M/s. AgustaWestland includes specific contractual provisions against bribery and the use of undue influence as well as an Integrity Pact," the Defence Ministry statement said.

Since no specific input has been received so far from the two governments, MoD (Ministry of Defence) has decided to refer the case to CBI for inquiry," the statement added.

Meanwhile, Finmeccanica, in a terse release from Rome on the issue, backed Orsi "with the hope that clarity is established quickly, whilst reaffirming its confidence in the Judges".

The IAF has sought the AgustaWestland choppers as a replacement for its Mi-17 cargo helicopters that have been modified for VVIP deployment. The Comptroller and Auditor General has adversely commented this, saying it was a waste of resources.